In a new report covered by Automotive News [sub], Goldman Sachs says GM will end the year with $12.5 billion in cash, and will need at least $22b in government money to survive. Goldman is suspending GM’s rating, putting the automaker on a “wait-and-see” basis until further bailout details emerge. Meanwhile, JP Morgan cut its GM rating to “neutral” from “overweight” saying the automaker needs “something immediately” to make it through the end of the year. Morgan also slashed GM’s stock price target, from $3.08 to $1.84, about a dollar off its trading price of $2.89 at the time of this writing. And while Goldman set the bailout minimum at $22b, Morgan reckons the bill for righting the General “could easily reach $30 billion unless GM reforms its vast liability structure.” GM stock is currently down about five percent on the day, although it’s shown resiliance to earlier Deutsche Bank analysis which valued the stock at precisely bupkis. Still, urgency is the common thread that ties all the analysis together, and if news doesn’t improve soon for GM, its stockholders could see their paper become worthless in short order. Rest assured, TTAC will have the latest developments as they occur.
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Anyone got any clue about how many GM vehicles (read: SUV’s and pickups) are being turned in off of lease (read: huge money hemmorhages) over the next six weeks?
That will help do some of the math for the FINAL RECKONING date for Generally Messedup.
Apparently this bailout would require approval also from the Bush Administration, I wonder if the people of Michigan will remember who they voted for last week? The question I have is: Can GM make it to January 20th, if Bush doesn’t want to play ball? This once great, proud corporation is down to day by day into bankruptcy hoping to exist just long enough until Barry O takes office?
GM needs to be left to it’s own fate. Making GM a publicly propped up incompetent maker of low quality mediocre inappropriatly desinged vehicles is a joke and a total waste of taxpayer’s money. Let GM die so we can move on to the next stage. Prolonging the agony, or becoming mired in the past by propping up this old dinosaur makes no sense.
I think it is already over for shareholders. Any bailout will likely see a reduction in shareholder equity, as of course would a C11.
Technically Congress can override Bush administration. Practically, they’ll be lucky to get together till January 20th.
I don’t know which way G.W. will go, but I hope that he’ll allow O-president to show his prudence on solving complex problems.
Meanwhile, it is GM twisting in the wind. Ford is very quiet, Ford family/trust really not looking forward to attract congressional focus, because why would congress bailout semi-private entity? Their governance is to be desired (trust owns 5% of stock and controls 40% vote).
Reduction in shareholder equity? HA! The existing shareholders are going to get jack. They are at the rear of a very long line behind all the debtors and the PBGC.
Counting the pension liability GM has been insolvent for quite some time. This is decades of deficit spending my management ie: purchasing todays labor peace with tomorrows payments. IIRC it was the Economist Magazine that described GM as “a Pension Scheme that makes cars.”
Whats stopping the executives of GM from putting their own money up to get the 22B? You know they have it. Why give them money without requiring bankruptcy to require them to nullify union contracts and cancel pensions. The bailout (handout) is not so they can continue as they are now which is total failure, its so they can completetly reinvent themselves.
I seriously doubt that the execs at GM are worth 22 billion in total. I mean, even at Ricks payscale thats a helluva a lot of money.
Whats stopping the executives of GM from putting their own money up to get the 22B?
I like that idea. If they want to stay in power and run the company and think they have a great plan(not likely) and they will start seeing profits in 2010 or 11 put your money where your mouth is. 50% of all the top layers of managements net worth would be a nice token to get the $22 billion. If they can’t become profitable and come begging for more money they will have to put up the other 50% or make way for new management and take the huge loss. Prove to us taxpayers you really think you can make it by putting your money on the line along with ours.
I would love to see Congress put that string on the money, I don’t think they would go for the deal in that case.
I wonder what Mercury Marine would do it GM went away. Where would it get its engines for its MerCruiser I/O engine packages if there was no GM to make the engines for them. My boat mechanic told me that GM makes a year’s worth of boat motors in 2 days. I guess the aftermarket would have to step it… what a disaster.
Bush needs to show some spine for once since taking office and take a stand in line with his abstinence-only sex education program:
Just Say No!
npbheights I read somewhere not to long ago that GM’s engine devision is worth $10 billion dollars by itself. A private investor, foreign company or someone will just buy that part up and keep it running as is, probably more profitably.
Don’t forget that there is huge value trapped in tha company just not under the big GM umbrella. Set the individual a profitable protions free from the boat anchor and they will start to kick ass again.
“Set the individual a profitable protions free from the boat anchor and they will start to kick ass again.”
That worked really well for Lehman Brothers too.
And exactly how many billions did GS and Morgan Stanley get….
oh, but that is different.
Redbarchetta: a Company that only made engines, a true “General Motors” would only make sense if there are cars and trucks to put them in. If nobody made GM cars and trucks, all that would be left would be the current GM fleet on the road, many of which would be worth so little if the parent company went away that they would not be worth putting new motors in anyway. Every day that passed, there would be fewer of them anyway, so a company that only made GM engines would not have a long term future. The marine market is important but very small. Maybe Mercury marine could pick up one small GM engine plant and tooling at auction and make them for themselves. It is just another aspect to think of as the deck chairs are being rearranged on SS General Motors…
I think you might have misunderstood me. I wasn’t talking about one manufacturing plant I was refering to the powertrain division and mostly V8 and V6 manufacturing as a whole. If it were to be bought up at auction as a whole unit for just s few billion it would be profitable easy. Even if GM were to be liquidated tomorrow the parts of it would not vanish off the face of the earth. The truck division would live on under some other owner, Chevy would continue, Holden ect. The parts left will need engines whether they own the engine division or not. And there is no reason to think that on the open market that other automakers wouldn’t want V8’s and V6’s, GM makes some damn good V8’s and some pretty competetive V6’s. Who is to say TaTa or the Chinese wont want to just buy them to dump into their trucks and SUV’s. Look at Yamaha they have an entire engine R&D department that just about anyone can buy from.
The parts do not have to be connected to the whole to be successful.
“Anyone got any clue about how many GM vehicles (read: SUV’s and pickups) are being turned in off of lease (read: huge money hemmorhages) over the next six weeks?”
Not sure how many are coming up overall, but I can tell you mine is coming up at the end of December. 2005 Yukon XL 6.1L 3/4 ton w/4 wheel steering. They want just over $25k for it or I can turn it in and walk away – no negotiation on the price – just $25k or walk way.
KBB puts it’s current value around $16k – I think you all know my answer on this one.